EQUITY

12 Months Ended

Dec. 31, 2012

Notes to Financial Statements [Abstract]

EQUITY

EQUITY

At December 31, 2012, the Company had authorization to maintain up to 34.0 million shares of treasury stock under its stock repurchase program as approved by the Board of Directors. Under its stock repurchase program, the Company purchased 998,356 shares and 2,187,382 shares during 2012 and 2011, respectfully, at an average price of $38.90 and $36.34, respectively. As of December 31, 2012 and 2011, the Company held 20.5 million and 21.1 million of treasury stock shares, respectively. During 2012, the Company repurchased outstanding shares at a value of $38.8 million. The Company also received proceeds of $34.2 million primarily as a result of 1.8 million stock options exercised during the year ended December 31, 2012. During 2011, the Company repurchased outstanding shares at a value of $79.5 million. The Company also received proceeds of $42.3 million primarily as a result of 2.1 million stock options exercised during the year ended December 31, 2011. It is the Company’s practice to issue shares from treasury stock when options are exercised. The tax benefit realized for the options exercised during the year ended December 31, 2012 and 2011 is $6.8 million and $9.2 million, respectively.

The following table represents total outstanding shares for the years ended December 31:

(in thousands)	Common Shares	Treasury Shares		Outstanding Shares
Balance at December 31, 2009	162,776	(15,815	)	146,961
Shares issued	—	1,489		1,489
Repurchase of common stock at cost	—	(6,715	)	(6,715	)
Balance at December 31, 2010	162,776	(21,041	)	141,735
Shares issued	—	2,084		2,084
Repurchase of common stock at cost	—	(2,187	)	(2,187	)
Balance at December 31, 2011	162,776	(21,144	)	141,632
Shares issued	—	1,688		1,688
Repurchase of common stock at cost	—	(998	)	(998	)
Balance at December 31, 2012	162,776	(20,454	)	142,322

The Company maintains the 2010 Equity Incentive Plan (the “Plan”) under which it may grant non-qualified stock options ("NQSO"), incentive stock options, restricted stock, restricted stock units (“RSU”) and stock appreciation rights, collectively referred to as “Awards.” Awards are granted at exercise prices that are equal to the closing stock price on the date of grant. The Company authorized grants under the Plan of 13.0 million shares of common stock, plus any unexercised portion of cancelled or terminated stock options granted under the DENTSPLY International Inc. 2002 Equity Incentive Plan, as amended, subject to adjustment as follows: each January, if 7% of the total outstanding common shares of the Company exceed 13.0 million, the excess becomes available for grant under the Plan. No more than 2.5 million shares may be awarded as restricted stock and RSU, and no key employee may be granted restricted stock and RSU in excess of approximately 0.2 million shares of common stock in any calendar year. The number of shares available for grant under the 2010 Plan as of December 31, 2012 is 10.5 million.

Stock options generally expire ten years after the date of grant under these plans and grants become exercisable over a period of three years after the date of grant at the rate of one-third per year, except when they become immediately exercisable upon death, disability or qualified retirement. RSU vest 100% on the third anniversary of the date of grant and are subject to a service condition, which requires grantees to remain employed by the Company during the three-year period following the date of grant. In addition to the service condition, certain key executives are subject to performance requirements. Similar to stock options, RSU become immediately exercisable upon death, disability or qualified retirement. The fair value of each RSU assumes that performance goals will be achieved. If such goals are not met, no compensation cost is recognized and any recognized compensation costs is reversed. Under the terms of the RSU, the three-year period is referred to as the restricted period. RSU and the rights under the award may not be sold, assigned, transferred, donated, pledged or otherwise disposed of during the three-year restricted period prior to vesting. Upon the expiration of the applicable restricted period and the satisfaction of all conditions imposed, all restrictions imposed on RSU will lapse, and one share of common stock will be issued as payment for each vested RSU.

The following table represents total stock based compensation expense and the tax related benefit for the years ended: 

	December 31,
(in thousands)	2012		2011		2010
Stock option expense	$	11,126	$	10,369	$	10,420
RSU expense	9,644		9,243		7,227
Total stock based compensation expense	$	20,770	$	19,612	$	17,647
Related deferred income tax benefit	$	5,775	$	5,021	$	4,886

There were 2.3 million non-qualified stock options unvested as of December 31, 2012. The remaining unamortized compensation cost related to non-qualified stock options is $13.5 million, which will be expensed over the weighted average remaining vesting period of the options, or 1.6 years. The unamortized compensation cost related to RSU is $15.0 million, which will be expensed over the remaining weighted average restricted period of the RSU, or 1.3 years.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of each option awarded. The following table sets forth the assumptions used to determine compensation cost for the Company’s NQSO issued during the years ended:

	December 31,
	2012			2011			2010 (a)
Weighted average fair value per share	$	8.91		$	8.86		$	9.06
Expected dividend yield	0.57		%	0.55		%	0.58		%
Risk-free interest rate	0.93		%	2.35		%	2.55		%
Expected volatility	26		%	24		%	22		%
Expected life (years)	5.10			5.07			6.42

(a) In 2010, the Human Resources Committee of the Company’s Board of Directors reviewed the Company’s practices for NQSO grants and determined that it would be more appropriate to make all regular equity grants in the February time frame, after the Company’s financial results are known for the prior year. Accordingly, there were no grants of NQSO in December 2010, which had been the historic practice.

The total intrinsic value of options exercised for the years ended December 31, 2012, 2011 and 2010 was $21.1 million, $27.0 million and $16.5 million, respectively.

The following table summarizes the NQSO transactions for the year ended December 31, 2012:

	Outstanding						Exercisable
(in thousands, except per share amounts)	Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value		Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value
December 31, 2011	10,148		$	31.23	$	51,402	8,049	$	30.06	$	50,365
Granted	1,346		38.62
Exercised	(1,409	)	24.26
Cancelled	(85	)	33.26
Forfeited	(94	)	33.97
December 31, 2012	9,906		$	33.18	$	69,079	7,599	$	31.79	$	64,819

The weighted average remaining contractual term of all outstanding options is 5.7 years and the weighted average remaining contractual term of exercisable options is 4.8 years.

The following table summarizes information about NQSO outstanding for the year ended December 31, 2012:

			Outstanding				Exercisable
(in thousands, except per share amounts and life)			Number Outstanding at December 31,	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Number Exercisable at December 31,	Weighted Average Exercise Price
Range of
Exercise Prices			2012				2012
10.01	-	20.00	6	0.4	$	18.02	6	$	18.02
20.01	-	30.00	3,525	3.7	26.45		3,522	26.45
30.01	-	40.00	5,366	7.2	35.40		3,065	35.40
40.01	-	50.00	1,009	4.9	44.99		1,006	44.90
			9,906	5.7	$	33.18	7,599	$	31.79

The following table summarizes the unvested RSU transactions for the year ended December 31, 2012:

	Unvested Restricted Stock Units
	Shares		Weighted Average Grant Date Fair Value
(in thousands, except per share amounts)
Unvested at December 31, 2011	897		$	32.50
Granted	422		38.65
Vested	(247	)	26.38
Forfeited	(38	)	35.97
Unvested at December 31, 2012	1,034		$	36.34